After the CAA and NRC protests, came the farmers’ protests, and with neither reaching their conclusive ends came the protest over fuel and LPG price rise and with all of them falling on deaf ears come the bank strikes. It is another day, another form of protest under the Modi government. Protests are becoming a commonplace in the country. But for the Modi government, strikes or protests are but “conspiracies of the opposition” and they do not necessarily mean people are unhappy. Decisions once made in NDA government are carved in stone and there is no going back because doing so would be a sign of weakness. After all, the Modi government has “dared to take decisions” that others could not. And so far there have been no wrong or bad decisions made by the BJP government, nothing admittedly wrong, including demonetisation. So this time the cynical public (just about 10 lakh workers) that has certainly fallen for the opposition’s tricks has called it a strike.
About ten lakh bank employees have disrupted banking services across PSBs over a two-day nationwide strike causing needless difficulties to banks’ customers. The reason being: the Central government’s decision to privatise Public Sector Banks (PSBs). The bank unions want the central government to retract this decision failing which they would continue to hold long strikes in the near future.
So what are PSBs and what does the Central Government’s new decision entail?
The PSBs are a type of bank in which the government controls or holds a majority stake. These include State Bank of India, Punjab National Bank, Bank of Baroda, Canara bank, Central Bank of India, etc. among a list of 12 PSBs.
Finance Minister Nirmala Sitharaman in her Union Budget speech for 2021-22 expressed the government’s intention to privatise two more public sector banks. IDBI was privatised in 2019 when the Central Government sold its majority stake to LIC.
Behind the government’s decision to privatise PSBs is the fact that the government has to infuse capital year after year to help them meet regulatory and growth capital needs despite stretched finances. So, the government’s move to have a bare minimum presence of public sector enterprises (PSEs) in strategic sectors, including “banking, insurance and financial services”, comes in the aforementioned backdrop. The government says it needs banks that can scale up “to meet the aspirational needs of this country.”
The employees of PSBs on the other hand are worried that their interests will not be protected and the perks they get as employees of a government-run institution will be lost. Others have said that privatisation will make banking services unaffordable for many people. The All India Bank Employees Association (AIBEA) has blamed the private sector for the huge chunk of bad loans. So instead of holding them responsible the government is rewarding them by handing over the banks, it said.
Economists have earlier pointed out that “private banks are even more prone to scams and failure” and that it was the state guarantee in PSBs that still generates trust in the public banking system.
Former RBI governor Raghuram Rajan has said that “it would be a colossal mistake to sell the banks to industrial houses.”
Many economists are against granting corporates access to banks as it will make financing easier for them. And the “history of such connected lending is invariably disastrous” they say.
The government has not said which two PSBs will be privatised but experts say the six PSBs that were left out of last year’s mega-consolidation exercise could be on the government’s radar for privatisation.
While time will only tell whether the move proves to be a boon or a bane for India the decision adds to the list of “anti-people” measures that have caused endless protests in the country.